TC Energy to sell 65% equity interest in Coastal GasLink pipeline

Canada-headquartered TC Energy Corporation is to sell a 65% equity interest in the Coastal GasLink Pipeline Project to KKR and Alberta Investment Management Corporation (AIMCo). 

TC Energy expects that Coastal GasLink will enter into a secured project financing construction credit facility with a syndicate of banks to fund up to 80% of the project during construction. Both transactions are expected to close in the first half of 2020.

Under the terms of the sale, TC Energy will receive upfront proceeds that include reimbursement of KKR and AIMCo’s proportionate share of the project costs, as well as additional payment streams through the project’s construction and operation. The company expects to record an after-tax gain of approximately $600 million upon closing of the transaction which includes the gain on sale, required revaluation of residual ownership interest to fair market value and recognition of previously unrecorded tax benefits. 

Coastal GasLink involves the construction of 670km of pipeline and associated facilities. Once completed, the pipeline will have an initial capacity of 2.1 billion cubic feet per day and connect abundant Western Canadian Sedimentary Basin natural gas supply from the Dawson Creek, British Columbia ,area to the LNG Canada liquefaction and export facility being constructed in Kitimat, British Columbia. All necessary regulatory permits have been received for the Project and construction activities have commenced. 

RBC Capital Markets is acting as exclusive financial advisor to TC Energy and as Global Lead Coordinating Arranger on the project finance construction facility.